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The proceeds from the Tata Steel follow-on public offering will be used mainly for the expansion of the company's Indian operations.
The price band for the FPO has been fixed at Rs 594-610. The issue will open for anchor investors on Tuesday. For others, it will open on Wednesday and close on Friday. “Of the Rs 3,500 crore (that plans to be raised), Rs 1,800 crore will be used for the expansion of the facility at Jamshedpur and Rs 1,000 crore will be used to repay debt. A part of the proceeds will be at the company's board discretion to invest in projects there,” said Mr Koushik Chatterjee, Chief Financial Officer at Tata Steel.
The company plans to invest Rs 15,000 crore to Rs 17,000 crore in the Jamshedpur facility, he said, of which the company has raised Rs 7,000 crore mainly through internal accruals. “The Orissa project is also on track and work will start by the end of this month.”
The company will issue 5.5 crore shares through the FPO. The promoters' stake will reduce by 2.4 per cent after the equity dilution, said Mr Chatterjee. As on September 30, the promoters hold 32.48 per cent stake in the company.
Kotak Mahindra Bank, Citi, Deutsche Bank AG, Royal Bank of Scotland Plc, SBI Capital Markets, Standard Chartered Bank Plc and HSBC Bank are the managers to the issue.
The shares of Tata Steel closed up 0.19 per cent at Rs 622.9 on the BSE on Monday.
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